Benzinga - Former Goldman Sachs (NYSE: NYSE:GS) executive Raoul Pal has advised to never use leverage on Bitcoin (CRYPTO: BTC), as it amplifies your potential investment losses.
What Happened: Pal tweeted that owning Bitcoin, by all means, is a good idea. “It will probably work very well over 5 years+.”
However, he has asked investors to never “use leverage” to own Bitcoin.
Pal was responding to a Twitter thread posted by an anonymous user on how MicroStrategy (NASDAQ: MSTR) CEO Michael Saylor started plowing the company’s cash into Bitcoin.
“The strategy of buying Bitcoin as a replacement of dollars for the company’s treasury is already questionable,” the user tweeted.
@kittysquiddyThe user pointed out that MicroStrategy took $2.2 billion in debt to buy more Bitcoin, which means “leverage of 14 times. It is reckless.”A thread on $MSTR aka Microstrategy.
This should really be parody but it isn’t.
Microstrategy (MSTR) is a US Tech company that provides business intelligence, mobile software and cloud-based services. It was founded by Michael Saylor in 1989.
— Element (@Elementcapl) November 13, 2022
See Also: Best cryptocurrencies to hedge against inflation?
When asked by another Twitter user “whether this time is as bad as times past"? Pal responded by saying, “No.”
MicroStrategy currently holds 130,000 Bitcoins and is the largest corporate holder of the asset, according to the company’s fiscal report. On Nov. 1, the company reported a loss worth $727,000 for the quarter.
Another analysis posted by the Blockchain Center noted that if MicroStrategy had bought Ethereum (CRYPTO: ETH) at the same time it bought Bitcoin (August 2021), it would now have 3.54 million ETH. This would be worth $5.45 billion, twice as much as its Bitcoin holdings.
Price Action: At the time of writing, Bitcoin was trading at $16,782, up 0.66%, and Ethereum was trading at $1261.73, up 2.10%, in the last 24 hours, according to Benzinga Pro.
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